Vistaprint Reports First Quarter Fiscal Year 2015 Financial Results

Revenue grew 6 percent year over year excluding the impact of
currency exchange rate fluctuations and revenue from businesses
acquired during the past twelve months

GAAP net income per diluted share increased to $0.71, compared
with $0.01 in the same quarter last year

Non-GAAP adjusted net income per diluted share increased 87
percent year over year to $0.86

October 29, 2014 04:15 PM Eastern Daylight Time

VENLO, Netherlands--(EON: Enhanced Online News)--Vistaprint N.V. (Nasdaq: VPRT), a leading online provider of
professional marketing products and services to micro businesses and the
home, today announced financial results for the three month period ended
September 30, 2014, the first quarter of its 2015 fiscal year.

“Financial Guidance as of October 29, 2014.”

“We are off to a good start to fiscal 2015 and remain confident in our
strategy and our ability to execute operationally,” said Robert Keane,
president and chief executive officer. “Quarterly revenue was in line
with our expectations for improved growth in our Vistaprint brand and
strong growth from recent acquisitions. Profitability, operating cash
flow and free cash flow were also strong. We continued to improve the
customer value proposition for our Vistaprint brand, began to integrate
our recent acquisitions, and accelerated investment in software for our
mass customization platform.”

Consolidated Financial Metrics:

Revenue for the first quarter of fiscal year 2015 was $333.9 million,
a 21 percent increase compared to revenue of $275.1 million reported
in the same quarter a year ago. Excluding the estimated impact from
currency exchange rate fluctuations and revenue from businesses
acquired during the past twelve months, total revenue grew 6 percent
year over year in the first quarter.

Gross margin (revenue minus the cost of revenue as a percent of total
revenue) in the first quarter was 61.0 percent, down from 65.2 percent
in the same quarter a year ago. The year-over-year reduction in gross
margin was primarily due to our recent acquisitions of People & Print
Group and Pixartprinting, which have lower gross margins than our
Vistaprint-branded business. Excluding the businesses we acquired
during the past twelve months, our gross margin increased slightly
year over year.

Operating income in the first quarter was $16.9 million, or 5.1
percent of revenue, a significant increase compared to $8.4 million,
or 3.1 percent of revenue, in the same quarter a year ago.

GAAP net income for the first quarter was $23.7 million, or 7.1
percent of revenue, compared to $0.4 million, or 0.1 percent of
revenue in the same quarter a year ago. Part of the significant
year-over-year growth in GAAP net income is due to below-the-line
currency movements which created losses in the year-ago period but
gains in the current period.

GAAP net income per diluted share for the first quarter was $0.71,
versus $0.01 in the same quarter a year ago, due in part to the
currency movements described above.

Non-GAAP adjusted net income for the first quarter, which excludes
amortization expense for acquisition-related intangible assets, tax
charges related to the alignment of acquisition-related intellectual
property with our operational structure, the change in the fair-value
estimate of our acquisition-related earn-outs, unrealized currency
gains and losses on currency hedges and intercompany financing
arrangements included in net income, and share-based compensation
expense and its related tax effect, was $28.8 million, or 8.6 percent
of revenue, representing a 79 percent increase compared to $16.1
million, or 5.9 percent of revenue, in the same quarter a year ago.

Non-GAAP adjusted net income per diluted share for the first quarter,
as defined above, was $0.86, versus $0.46 in the same quarter a year
ago.

Capital expenditures in the first quarter were $16.7 million, or 5.0
percent of revenue.

During the first quarter, the company generated $52.6 million of cash
from operations and $32.3 million in free cash flow, defined as cash
from operations less purchases of property, plant and equipment,
purchases of intangible assets not related to acquisitions, and
capitalization of software and website development costs.

As of September 30, 2014, the company had $60.9 million in cash and
cash equivalents and $447.9 million of debt. After considering debt
covenant limitations, as of September 30, 2014 the company had $268.1
million available for borrowing under its committed credit facility.

Operating metrics are provided as a table-based supplement to this press
release. Starting in the first quarter of fiscal 2014, all operating
metrics include Albumprinter and Webs, and post-acquisition prior-period
comparisons have been adjusted to reflect the same consolidated view.
The recent acquisitions of People & Print Group, Pixartprinting and
FotoKnudsen are not yet incorporated into our customer metrics.

Fiscal 2015 Outlook as of October 29, 2014:

Ernst Teunissen, executive vice president and chief financial officer,
said, “Our operational outlook for the full year remains unchanged. We
continue to expect mid-to-high single-digit constant-currency revenue
growth rates for the Vistaprint brand and double-digit revenue growth
for our recently acquired brands. We also continue to expect higher
operating margin, earnings, operating cash flow and free cash flow for
fiscal 2015 versus fiscal 2014 even as we make important investments in
our business. We have updated our revenue guidance to reflect recent
currency movements since we last provided our outlook in July, but our
constant currency growth expectations remain the same. Our non-GAAP EPS
guidance is unchanged, as these currency movements are expected to have
limited impact on the bottom line. We have increased our GAAP EPS
guidance to reflect a few non-operational impacts from the first quarter
change in items we exclude from our non-GAAP reporting.”

Financial Guidance as of October 29, 2014:

The company provides revenue and earnings guidance on only a fiscal year
basis, not quarterly. Our guidance incorporates completed acquisitions
and share repurchases, and outstanding debt obligations, as of October
29, 2014. Based on current and anticipated levels of demand, the company
expects the following financial results:

Fiscal Year 2015 Revenue

The company expects revenue of approximately $1,430 million to $1,500
million, or 13 percent to 18 percent growth year over year in reported
terms and 15 percent to 20 percent growth on a constant-currency
basis. Constant-currency growth expectations assume a recent 30-day
currency exchange rate for all currencies.

Fiscal Year 2015 GAAP Net Income Per Diluted
Share

The company expects GAAP net income per diluted share of approximately
$2.24 to $2.74, which assumes 33.3 million weighted average diluted
shares outstanding. Based on a recent 30-day currency exchange rate
for relevant currencies, we estimate that realized gains and losses on
currency forward contracts as well as natural hedges will largely
offset the currency impact to revenue in our full-year net income
results.

Fiscal Year 2015 Non-GAAP Adjusted Net Income
Per Diluted Share

The company expects non-GAAP adjusted net income per diluted share of
approximately $3.46 to $3.96, which excludes our expectations for the
following items:

Acquisition-related amortization of intangible assets of
approximately $21.7 million or approximately $0.64 per diluted
share

Share-based compensation expense and its related tax effect of
approximately $22.9 million or approximately $0.68 per diluted
share

The change in fair-value estimate of our acquisition-related
earn-outs of approximately $3.7 million or approximately $0.11 per
diluted share

Tax charges related to the alignment of acquisition-related
intellectual property with global operations of approximately $2.2
million, or $0.06 per diluted share

An unrealized currency transaction gain of $8.0 million, or $0.23
per diluted share, based on a recent 30-day currency exchange rate
for relevant currencies

Based on a recent 30-day currency exchange rate for relevant
currencies, we estimate that changes in unrealized gains and losses on
currency forward contracts will have an immaterial impact on our
full-year results. This guidance assumes a non-GAAP weighted average
diluted share count of approximately 33.8 million shares.

Fiscal Year 2015 Depreciation and Amortization
and Capital Expenditures

The company expects depreciation and amortization expense to be
approximately $100 million to $105 million. This includes the
amortization of acquisition-related intangible assets described above
in our non-GAAP earnings per share expectations, as well as our
expectations for capitalized software development costs.

The company expects to make capital expenditures of approximately $80
million to $100 million. The majority of planned capital investments
are designed to support the planned long-term growth of the business.
This fiscal year, we expect to invest about $20 million to build a new
manufacturing facility in Japan as part of our joint venture there and
about $20 million to $25 million in the expansion of our product lines
and other new manufacturing capabilities.

The foregoing guidance supersedes any guidance previously issued by the
company. All such previous guidance should no longer be relied upon.

Vistaprint has posted on the Investor Relations section of www.vistaprint.com,
an end-of-quarter presentation with accompanying prepared remarks. On
Thursday, October 30, 2014 at 7:30 a.m. (EDT) the company will host a
live Q&A conference call with management to discuss the financial
results, which will be available via web cast on the Investor Relations
section of www.vistaprint.com
and via dial-in at +1 (877) 299-4454, access code 79550141. A replay of
the Q&A session will be available on the company’s Web site following
the call on October 30, 2014.

About non-GAAP financial measures

To supplement Vistaprint’s consolidated financial statements presented
in accordance with U.S. generally accepted accounting principles, or
GAAP, Vistaprint has used the following measures defined as non-GAAP
financial measures by Securities and Exchange Commission, or SEC, rules:
non-GAAP adjusted net income, non-GAAP adjusted net income per diluted
share, free cash flow, constant-currency revenue growth and
constant-currency revenue growth excluding revenue from acquisitions
made during the past year. The items excluded from the non-GAAP adjusted
net income measurements are share-based compensation expense and its
related tax effect, amortization of acquisition-related intangibles, tax
charges related to the alignment of acquisition-related intellectual
property with global operations, changes in unrealized gains and losses
on currency forward contracts, unrealized currency transaction gains and
losses on intercompany financing arrangements and the related tax
effect, the charge for the disposal of our minority investment in China,
and the change in fair-value estimate of our acquisition-related
earn-outs. Free cash flow is defined as net cash provided by operating
activities less purchases of property, plant and equipment, purchases of
intangible assets not related to acquisitions, and capitalization of
software and website development costs. Constant-currency revenue growth
is estimated by translating all non-U.S. dollar denominated revenue
generated in the current period using the prior year period’s average
exchange rate for each currency to the U.S. dollar and excludes the
impact of gains and losses on effective currency hedges recognized in
revenue in the prior year periods. Constant-currency revenue growth
excluding revenue from acquisitions during the past year excludes the
impact of currency as defined above and revenue from People & Print
Group, Pixartprinting and FotoKnudsen.

The presentation of non-GAAP financial information is not intended to be
considered in isolation or as a substitute for the financial information
prepared and presented in accordance with GAAP. For more information on
these non-GAAP financial measures, please see the tables captioned
“Reconciliations of Non-GAAP Financial Measures” included at the end of
this release. The tables have more details on the GAAP financial
measures that are most directly comparable to non-GAAP financial
measures and the related reconciliation between these financial measures.

Vistaprint’s management believes that these non-GAAP financial measures
provide meaningful supplemental information in assessing our performance
and liquidity by excluding certain items that may not be indicative of
our recurring core business operating results, which could be non-cash
charges or discrete cash charges that are infrequent in nature. These
non-GAAP financial measures also have facilitated management’s internal
comparisons to Vistaprint’s historical performance and our competitors’
operating results.

About Vistaprint

Vistaprint N.V. (Nasdaq: VPRT) empowers more than 16 million micro
businesses and consumers annually with affordable, professional options
to make an impression. With a unique business model supported by
proprietary technologies, high-volume production facilities, and direct
marketing expertise, Vistaprint offers a wide variety of products and
services that micro businesses can use to expand their business. A
global company, Vistaprint employs over 5,300 people, operates more than
50 localized websites globally and ships to more than 130 countries
around the world. Vistaprint's broad range of products and services are
easy to access online, 24 hours a day at www.vistaprint.com.

Vistaprint and the Vistaprint logo are trademarks of Vistaprint N.V. or
its subsidiaries. All other brand and product names appearing on this
announcement may be trademarks or registered trademarks of their
respective holders.

This press release contains statements about our future expectations,
plans and prospects of our business that constitute forward-looking
statements for purposes of the safe harbor provisions under the Private
Securities Litigation Reform Act of 1995, including but not limited to
our expectations for the growth, development, and profitability of our
business and our recent acquisitions and our financial outlook and
guidance set forth under the headings “Fiscal 2015 Outlook as of October
29, 2014” and “Financial Guidance as of October 29, 2014.”
Forward-looking projections and expectations are inherently uncertain,
are based on assumptions and judgments by management, and may turn out
to be wrong. Our actual results may differ materially from those
indicated by these forward-looking statements as a result of various
important factors, including but not limited to flaws in the assumptions
and judgments upon which our forecasts are based; our failure to execute
our strategy; our inability to make the investments in our business that
we plan to make; the failure of our strategy, investments, and efforts
to reposition the Vistaprint brand to have the effects that we expect;
our failure to promote and strengthen our brands; our failure to acquire
new customers and enter new markets, retain our current customers and
sell more products to current and new customers; our failure to identify
and address the causes of our revenue weakness; our failure to manage
the complexity of our business and expand our operations; costs and
disruptions caused by acquisitions and strategic investments; the
failure of the businesses we acquire or invest in, including People &
Print Group, Pixartprinting, and FotoKnudsen, to perform as expected;
the willingness of purchasers of marketing services and products to shop
online; the failure of our current and new marketing channels to attract
customers; our failure to manage growth and changes in our organization;
currency fluctuations that affect our revenues and costs including the
impact of currency hedging strategies and intercompany transactions;
unanticipated changes in our markets, customers, or business;
competitive pressures; interruptions in or failures of our websites,
network infrastructure or manufacturing operations; our failure to
retain key employees; our failure to maintain compliance with the
financial covenants in our revolving credit facility or to pay our debts
when due; costs and judgments resulting from litigation; changes in the
laws and regulations or in the interpretations of laws or regulations to
which we are subject, including tax laws, or the institution of new laws
or regulations that affect our business; general economic conditions;
and other factors described in our Form 10-K for the fiscal year ended
June 30, 2014 and the other documents we periodically file with the U.S.
Securities and Exchange Commission.

In addition, the statements and projections in this press release
represent our expectations and beliefs as of the date of this press
release, and subsequent events and developments may cause these
expectations, beliefs, and projections to change. We specifically
disclaim any obligation to update any forward-looking statements. These
forward-looking statements should not be relied upon as representing our
expectations or beliefs as of any date subsequent to the date of this
press release.

Starting in Q3 Fiscal 2012, Albumprinter and Webs results have been
included in customer metrics. People & Print Group, Pixartprinting
and FotoKnudsen are not included in the customer metrics above.

Also starting in the same period, a minor calculation methodology
change was made in order to accommodate the consolidation.

1Orders from first-time customers in period,
excluding People & Print Group, Pixartprinting and FotoKnudsen2
Total order volume in period, excluding People & Print Group,
Pixartprinting and FotoKnudsen3 Total bookings,
including shipping and processing, divided by total orders, excluding
People & Print Group, Pixartprinting and FotoKnudsen4
Number of individual customers who purchased from us in a given period,
with no regard to frequency of purchase, excluding People & Print Group,
Pixartprinting and FotoKnudsen5 Total bookings
for a trailing twelve month period, including shipping and processing,
divided by number of unique customers in the same period, excluding
People & Print Group, Pixartprinting and FotoKnudsen6
External advertising and commissions expense, excluding People & Print
Group, Pixartprinting and FotoKnudsen7 External
advertising and commissions expense for the consolidated business8
Other revenue includes miscellaneous items which account for less than
1% of revenue

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